Whom Should you Hire at a Startup?

Whom Should you Hire at a Startup?

Only Hire A+ People Who Punch Above Their Weight Class

This is part of my ongoing posts on Startup Advice. There are people who tell startups that they should hire the most senior people that they can find. I’m not one of those. I believe that you should always hire people are are looking to “punch above their weight class,” which means to hire people who want to be one league above where they are today.

Don’t confuse this with the quality of the individual. I’m a big believer in only hiring A+ team members. I’ll explain both below. Please don’t also confuse this with whether a VC should invest in a CEO who’s done it before – that’s a given.

I’m talking about what most of you are tempted to do. I know because I have this chat all the time – including this morning. You’re stressed. Everyone in the outside world is talking about how great you are but internally you know that your sales aren’t ramping, your product isn’t shipping on time, you have doubts about the quality of your code, you’re not convinced you’re doing a good job on marketing – whatever.

Your solution? Bring in a heavyweight. My advice: don’t.

Weight Class: Let’s take sales. I see a lot of CEO’s who haven’t gotten the quick ramp in sales that they had hoped for want to reach quickly to bring in a VP Sales who has done it all before. It is tempting because you not only see that they were VP Sales at 3 other startups but also that they have great access (according to their resume) to senior executives at companies you’re trying to target. Bringing in a senior person who’s “done it all before” is often a mistake in a startup.

Why? Well, first let’s be honest. At your stage of development do you really think a shit-hot VP Sales is going to join you to head up sales? It reminds me of the famous Groucho Marx line, “I’d never want to join a club that would accept me as a member.” (I think Woody Allen then used this line?)

More likely this person who wants to work at your fledgling company is a decent performer but not a superstar. But aside from that, the skills that are required to be a VP Sales (e.g. hiring / training / motivating staff, setting up sales compensation programs, implementing and enforcing a sales policy) are not consistent with the skills you need in your company at this stage.

You’re far more likely to find success from an individual contributor. You need the sales executive who aspires to be a VP Sales (e.g. one weight class above where he’s at) but has not yet been given the chance.. He’s got something to prove. He’s joining you because your company offers him/her the hope of the big equity package but likely the step forward in his career that he’s been looking for.

And you can always bring on a senior person as a mentor / coach to help guide you personally to become a better sales leader until you’re ready for somebody more senior on your team. In LA I know that people like Vince Thompson do a great job with this. In NorCal there are zillions of people. One group I talked to in the past and really liked was Sally Duby over at PhoneWorks.

So what if you’re already a mid-stage startup. You’re doing $2-$5 million in sales and looking to take the company to the next level. Shouldn’t you just hire the most senior guy you can out of Oracle, Salesforce.com, Microsoft, EA or whatever your relevant industry is? Not so fast. Hiring the big gun will often still be one weight class above where you want to hire.

Let me tell you my story.

In my first company we had achieved a small bit of scale. In our first year of sales we did $2.1 million. This was a reasonable achievement when you consider that it was 2001-02, one of the worst years to be selling enterprise software and we were selling it SaaS style, which was still evangelical back then. In our second year of sales we did $5.9 million and our third year we hit $7.7 million. So we were starting to become a real business. I worked with the board who encouraged me to bring in heavy weights. I shot as high as I could.

SaaS was hot so I was able to land a very impressive guy. I was able to hire the former European head of sales for the largest document management player in the world. He was 10 years my senior and way more accomplished in terms of big enterprise company experience. I had always been a scrappy entrepreneur. Now was time to bring in some process.

One of the things that I had done to help me gain access to senior people that I didn’t know was to bring on a senior guy from industry as a mentor. He helped set up senior meetings for me based on his personal relationships with people. I had given him a small equity stake in my company. This relationship was invaluable because it got me in front of people who I would have ordinarily struggled to get access to in a timely manner.

One such meeting that he set up was with the CIO of the largest consumer products company in Europe. Think the equivalent of Proctor & Gamble. I couldn’t possibly name the them, but it was a huge company, very senior executive.

I asked my new SVP Sales to take the meeting and he had spent a couple of weeks preparing. I got a call the morning of the meeting from my assistant (who was also shared with this gentleman) that he was planning to cancel the CIO meeting. I called him and asked him why and he said that he had scheduled a meeting with all of his top sales guys (we had about 8 by that point) to talk about sales pricing. He felt that we didn’t price correctly and he didn’t want to see customers until he had a grip on it.

WTF!! ?? !! Needless to say I took the meeting myself. A startup CEO would never pass on that opportunity. It is something that perhaps a big company person could fathom. Maybe our pricing needed work – who knows. But in small companies you have a certain ethos of hustling and taking every opportunity given to you.

Several weeks later we parted ways along with another senior executive brought on by this guy. It was clear that there wasn’t a fit. I don’t believe that this was something unique to me. I believe that taking senior people from industry and assuming that they’ll do well in a startup is a farce. I often tell people that it took 18 months for me to undo all of my Andersen Consulting experience to allow me to become an entrepreneur (although in my youth I had done several entrepreneurial activities)

So when I’m helping people think about whom to hire I given the following guidance:

– It’s OK to find somebody who’s had academy experience (e.g. IBM, Microsoft, Oracle) as long as they’ve done a start-up after that before coming to you

– It’s far better to hire somebody who’s shit hot but stepping up a role (e.g. director to VP) than to hire somebody who has already held a bigger role and is taking a step back because they’re after an equity play in a start-up

– Be careful not to hire managers for a job that requires individual contribution. This is oil & water territory (chalk & cheese if you’re a UK reader ;-))

– Never hire somebody who is going to relocate for your job unless they’re young, single and have no attachments. I’ve hired so many people who were going to move after they got my job offer. I can’t tell you how many times I’ve encountered the house that wouldn’t sell, the need for the kids to finish the school year, the wife who can’t find a local job. Life’s too short – find somebody geographically desirable or totally mobile.

A Plus Employees: One other quick note is about the quality of the people you hire. In arguing for people who punch above their weight class I’m not arguing for tell talented individuals. To the contrary. I believe very much in hiring the best people you can possible attract and making compensation (either equity or cash) enough to motivate them to join and stay.

I never believe in hiring B players and then trying to upgrade with more talented people later when the company has more cash, more customers or is performing better. The problem is that A players are only attracted to work at places where they see other A players. They smell B from a mile away. And also B players often don’t hire other B people. In my experience B players hire C people. A begets A, B begets C. Don’t go there.

The advice to not hire too senior should come as no surprise to anybody who read my views that “Startup Founders Should Flip Burgers” or in other words should do many of the detailed jobs themselves.

Ok, I know it’s controversial. If you want to call BS have at me in the comments 😉

No, I'm not. I'm not ageist. I'm only arguing not to hire people more senior than their job function requires.

http://www.mediaboost.com/ Uri

Woody Allen USED this line in his fabulous “annie hall”, so keep it…

I find it very hard to define A+ employee till i actually work with a person for 2-3 months. We hired 3 people already that looked A+ by all parameters, but didn't deliver. There are certain qualities to a person that can be judged only after some traction… SO, i would add to your concept that you need to re-estimate your judgment few months down the road to make sure you chose right, and if were wrong, don't keep it going.

http://shogun1947.blogspot.com Shogun1947

Great post and its very informative. I fully agree with you that getting someone who can punch above his weight is critical. I generally look for A players who are flexible, have lots of energy and brimming with optimism.

Based on my experience some of the A players have attitude issues, are not very flexible and are high maintenance. We need to watch for for these type of people. Last thing you want is to spend time managing them as opposed to managing your business.

http://www.michaelbroukhim.com michaelbroukhim

really enjoyed this piece. great stuff Mark. In my own experience, everytime we've tried to take a shortcut in hiring, it's backfired; when we've aimed “too high” (e.g. sorta already made it), it tends to fall apart… there's just no replacement for hunger + talent.

http://blog.adsdevshop.com/ Robert Dempsey

I agree with you on that for sure and I don't think you're ageist. Experience definitely has it's place, and when used tactically can have a great effect. Used too early and you can get bogged down.

http://www.echosign.com/ Jason M. Lemkin

Amen. FWIW, I think entrepeneurs know this even better that VCs, though it should be the other way around. VCs tend to push the execs you advise against hiring.

http://shogun1947.blogspot.com Nandu Muralidharan

Great post and its very informative. I fully agree with you that getting someone who can punch above his weight is critical. I generally look for A players who are flexible, have lots of energy and brimming with optimism.

Based on my experience some of the A players have attitude issues, are not very flexible and are high maintenance. We need to watch for for these type of people. Last thing you want is to spend time managing them as opposed to managing your business.

I've gotten some interest in big firm consultants (2 of them!) joining my startup. I can't think of a single reason why I would pull the trigger. Their contacts are probably not as robust as they believe, their knowledge rarely seems to translate into actual output, and they tend to be prohibitive know-it-alls (not their fault, just the world they come from).

However, I have a prospective investor telling me I'm a fool for passing up the chance to hire an ex-Deloitte strategy guy as a COO. I suspect he's never had a big-firm consultant work for him as an employee (I've worked with several). What have you observed from ex-consultants? Are they a terrible fit for startups?

Very helpful post. Awesome.

http://www.echosign.com/ Jason M. Lemkin

Amen. FWIW, I think entrepeneurs know this even better that VCs, though it should be the other way around. VCs tend to push the execs you advise against hiring.

http://openswipe.com/ Casey Allen

I've gotten some interest from big firm consultants (2 of them!) in joining my startup. However, I can't think of a single reason why I would pull the trigger. Their contacts are probably not as robust as they believe, their knowledge rarely seems to translate into actual output, and they tend to be prohibitive know-it-alls (not their fault, just the world they come from).

However, I have a prospective investor telling me I'm a fool for passing up the chance to hire an ex-Deloitte strategy guy as a COO. I suspect he's never had a big-firm consultant work for him (I've worked with several). What have you observed from ex-consultants? Are they a terrible fit for startups in filling a c-level role? Anybody have any opinions or experiences?

I think it's a forgone conclusion Accenture folks will ask for too many options and spend too much time on their BlackBerries pretending to look busy…

Very helpful post. Awesome.

http://www.linkedin.com/in/rajatsuri rajatsuri

This guy seems to have lost the entire point of the article, and decided he'd wallow in a bit of self-righteousness instead.

My understanding of 'A', 'B' or 'C' as ratings for an employee is an abstracted measure of how good a fit he is for the company. It's simply not feasible to write about performance while discussing too many independent variables like 'hard-working' or 'smart' or 'creative' since that's not the point of this article

No one is actually telling the employees at performance reviews that 'You're a C+ player'.. (although I can see some big companies doing that!)

http://www.linkedin.com/in/rajatsuri rajatsuri

Mark I think this is an important point. The main reason I feel I need to hire 'big-company' people is because of pressure from investors to boost the 'Team' slide on our deck…just because we often have to summarize our qualifications in a few recognizable words (ideally something like 'Google' or in our case maybe 'OpenTable')

How do you communicate 'hunger' to investors? Almost everyone in my startup is punching one notch above their weight right now, and I think it's working out just about perfectly – we have a culture of 'anything is possible' that makes it a lot of fun to go to work.

http://www.linkedin.com/in/rajatsuri rajatsuri

This guy seems to have lost the entire point of the article, and decided he'd wallow in a bit of self-righteousness instead.

My understanding of 'A', 'B' or 'C' as ratings for an employee is an abstracted measure of how good a fit he is for the company. It's simply not feasible to write about performance while discussing too many independent variables like 'hard-working' or 'smart' or 'creative' since that's not the point of this article

No one is actually telling the employees at performance reviews that 'You're a C+ player'.. (although I can see some big companies doing that!)

http://www.linkedin.com/in/rajatsuri rajatsuri

Mark I think this is an important point. The main reason I feel I need to hire 'big-company' people is because of pressure from investors to boost the 'Team' slide on our deck…just because we often have to summarize our qualifications in a few recognizable words (ideally something like 'Google' or in our case maybe 'OpenTable')

How do you communicate 'hunger' to investors? Almost everyone in my startup is punching one notch above their weight right now, and I think it's working out just about perfectly – we have a culture of 'anything is possible' that makes it a lot of fun to go to work.

Totally agree. Golden rule of startups: hire slowly, fire fast. You never know if they're A until you work with them.

http://bothsidesofthetable.com msuster

Agreed re: energy, common sense and ambition. I do prefer to find people who have worked in the job function before – at least somewhat.

http://bothsidesofthetable.com msuster

Funnily enough the word I use most often when people ask who I like to invest in and who I recommend people hire is “scrappy”

http://bothsidesofthetable.com msuster

Agreed. I wish I would have thought of this point before I wrote the post. I'd much rather have an A- person with a great attitude than an A+ with attitude. Thanks for you input. Maybe the topic for a separate post 😉

http://bothsidesofthetable.com msuster

I know. I went through it myself. When I didn't say in the post was that it was the VCs who pushed me to hire the senior guys. The whole experience of hiring then firing was destructive on the company.

http://bothsidesofthetable.com msuster

Only hire the ex strategy guy if he/she went to work for a startup afterward and unlearned everything they were taught. If they haven't worked for a startup I'd say, “Danger, Will Robinson!”

http://bothsidesofthetable.com msuster

1. Google or OpenTable doesn't necessarily mean they wouldn't be a good employee2. Avoid letting VCs tell you to hire senior people. Most VCs suggest people too experienced but don't understand that these people don't perform well at your stage of company. And if they're going to force it … run!

http://bothsidesofthetable.com msuster

Totally agree. Golden rule of startups: hire slowly, fire fast. You never know if they're A until you work with them.

http://bothsidesofthetable.com msuster

Agreed re: energy, common sense and ambition. I do prefer to find people who have worked in the job function before – at least somewhat.

http://bothsidesofthetable.com msuster

Funnily enough the word I use most often when people ask who I like to invest in and who I recommend people hire is “scrappy”

http://bothsidesofthetable.com msuster

Agreed. I wish I would have thought of this point before I wrote the post. I'd much rather have an A- person with a great attitude than an A+ with attitude. Thanks for you input. Maybe the topic for a separate post 😉

http://bothsidesofthetable.com msuster

I know. I went through it myself. When I didn't say in the post was that it was the VCs who pushed me to hire the senior guys. The whole experience of hiring then firing was destructive on the company.

http://bothsidesofthetable.com msuster

Only hire the ex strategy guy if he/she went to work for a startup afterward and unlearned everything they were taught. If they haven't worked for a startup I'd say, “Danger, Will Robinson!”

http://bothsidesofthetable.com msuster

1. Google or OpenTable doesn't necessarily mean they wouldn't be a good employee2. Avoid letting VCs tell you to hire senior people. Most VCs suggest people too experienced but don't understand that these people don't perform well at your stage of company. And if they're going to force it … run!

http://rafer.tumblr.com rafer

I also target customers this way. I always want to sell to/partner with the hungry #2/3/4. They work harder and invest more aggressively to pursue their competitors.

http://bothsidesofthetable.com msuster

Funny. I was just having this conversation today. I was telling them, “listen, Twitter is the 800 pound gorilla. They don't need to partner with you. Who is bummed out at Twitter's success. Let's partner with them. They'll be hungrier and they're still MUCH bigger than we are.

http://rafer.tumblr.com rafer

I also target customers this way. I always want to sell to/partner with the hungry #2/3/4. They work harder and invest more aggressively to pursue their competitors.

http://bothsidesofthetable.com msuster

Funny. I was just having this conversation today. I was telling them, “listen, Twitter is the 800 pound gorilla. They don't need to partner with you. Who is bummed out at Twitter's success. Let's partner with them. They'll be hungrier and they're still MUCH bigger than we are.

I believe what Woody Allen said, paraphrasing Groucho, was that he would never want to date a woman who would have him as a beau.

http://www.nuiteq.com/ Harry van der Veen

Very good points, fully agree. It is indeed better to have a passionate potential A person that wants to prove himself, opposed to hiring an A guy that knows he is an A guy because he worked at a big company. These attitude guys in the long run probably take too much of your resources as well. Even though they might bring results, it is critical to have fun (but serious) during the job and in the end you and probably your colleagues would end up being annoyed by such a personality.

RR

You are as good as your last game. I guess people don't remain A,B or C through their life! Market, Culture, Products, Social Factors change people's category (A to B, B to C or C to A). I believe the interview process must decide if this exec will be a A or B or C when put in your (startup) company (culture, product etc). Do you have a though process on how to do this interview Mark Suster?

http://www.nuiteq.com/ Harry van der Veen

Very good points, fully agree. It is indeed better to have a passionate potential A person that wants to prove himself, opposed to hiring an A guy that knows he is an A guy because he worked at a big company. These attitude guys in the long run probably take too much of your resources as well. Even though they might bring results, it is critical to have fun (but serious) during the job and in the end you and probably your colleagues would end up being annoyed by such a personality.

RR

You are as good as your last game. I guess people don't remain A,B or C through their life! Market, Culture, Products, Social Factors change people's category (A to B, B to C or C to A). I believe the interview process must decide if this exec will be a A or B or C when put in your (startup) company (culture, product etc). Do you have a though process on how to do this interview Mark Suster?

http://bothsidesofthetable.com msuster

I agree with you that people aren't always A's, B's or C's. re: Interviewing – it's hard. Much of it is instinct in my opinion. But I'll think about some ideas about how I interview and maybe do a future post. Thanks for the idea.

http://bothsidesofthetable.com msuster

I agree with you that people aren't always A's, B's or C's. re: Interviewing – it's hard. Much of it is instinct in my opinion. But I'll think about some ideas about how I interview and maybe do a future post. Thanks for the idea.

vjgoel

As a former McKinsey type, I'd agree with Mark. There's really only 2 ways you should pursue the ex-consultants without startup experience:

1) advisory/ part time role where you can give them tasks and see if they're willing to execute themselves at a level appropriate for a startup. If so, bring them in accordingly…but make this a “let's try and see how this works” type of thing2) pure advisory role where you can bounce ideas off them.

From my own experience, market rate and enterprise level thinking beyond a startups needs generally makes ex-consultants tough. The work ethic of “get the job done” working in ambiguity can be a real add. As can strategic thinking about how to think 1 step ahead of where the business is today…but only 1 and not 2 or 3.

This has been a great dynamic I've had with my wife in her catering business… http://www.bitecatering.net (we specialize in bite-sized foods). I've tended to handle a more automated marketing campaign in a few hours a week and serve as a sounding board on customer conversion, talent, and scaling operations where she has been laser-focused on execution. Any more time I would spend after a few hours a week has generally been pretty low value-add. The strategic conversations generally tend to be far fewer0 at this stage than the ones on solid execution and customer traction…so plan your executive team's talents and bandwidth accordingly.